Fondo Italiano per l’Efficienza Energetica
Why is the project happening?
With the increased penetration of large-scale wind and solar projects, there is a growing need to time-shift the intermittent green energy produced to meet our actual demand; It’s not always windy or sunny when we need this power, and conversely there may be more renewable electricity than there is demand! Historically countries have used different types of generation and storage assets to manage our electricity networks, including pumped hydro storage capable of quickly providing hundreds of megawatts of electricity for several hours when needed.
This greater demand for long-duration grid-scale energy storage and considerations for geographic constraints and the environmental impact of pumped hydro has led to alternative solutions being explored; Lithium-Ion batteries in this use case and scale are too expensive over the life of the asset. Depleted salt caverns have been used to store both gas for inter-seasonal storage into the gas network, and compressed air as an energy vector to store electricity. Similar in concept to pumped hydro, Compressed Air Energy Storage (CAES) uses reversable-pump turbines to compress air (rather than pump water) and expand the air back to generate electricity in times of peak demand.
The emerging hydrogen economy and the advent of low-carbon hydrogen production has led to developers exploring hybridised solutions, where excess renewable electricity can be stored as both electricity and hydrogen. Connecting the electricity and gas networks using these energy vectors potentially has many benefits. Transitioning towards a more flexible whole energy system where electrons and hydrogen molecules can be generated from renewables, stored, and transported supports the decarbonisation of our electricity, hard-to-abate heat and transportation.
What is the project?
Fondo Italiano per l’Efficienza Energetica SGR S.p.A. (FIEE) is a private equity firm which manages ESG-compliant alternative investment funds (AIFs) focused on the energy transition. FIEE asked Kiwa to undertake a technical due diligence assessment for potential investment into energy storage projects using CAES and compressed hydrogen in both stand-alone and hybridised configurations.
The technology providers had undertaken a Front-End Engineering and Design (FEED) study on which the foundation of this assignment would be based. Various techno-economic scenarios would also be tested as part of the project for each of the locations specified to determine high-level feasibility for each.
Kiwa, among other analyses, did an independent assessment of the technical information to define the Technology Readiness Level (TRL) of the system as a whole. Kiwa reviewed the design assumptions of the major plant equipment to ensure performance and operational characteristics were within expectations and assessed the geological assumptions on the cavern performance across the various cycling regimes in each scenario. This was underpinned by assessing a broad evidence base of previous academic studies of similar cavern operational scenarios and known industry data on rotating equipment and hydrogen production.
What is the project outcome expected to be?
The work packages assessed the overall theoretical viability of the proposed deployment and operation for hybrid CAES plants, specific to the identified sites. In providing an impartial technical review of the major plant equipment, geological components and overall operation and maintenance expectations against what is considered industry norms, Kiwa provided a robust review of the proposed technical information and existing due diligence.
Undertaking an impact assessment on different operational scenarios allowed the client to stress-test their financial models and compare technical and commercial barriers between the proposed project configurations and locales. A high-level review of the business model was also undertaken, considering the proposed cost estimates of major equipment, balance of plant, civil work and general development costs and performance characteristics. This provided the client with a level of techno-commercial analysis to determine continuation of the development stage of each project and identify the most viable projects to develop from a proposed portfolio from the developer.
What is the role of Kiwa Gastec?
These are large multi-hundred-megawatt scale power projects and significant investment is required to develop from concept design, preliminary feasibility study, FEED and detailed design stage into bankable, shovel-ready energy plants. In performing an independent assessment of the technical due-diligence and operational performance characteristics provided by the stakeholders, Kiwa was able to act as a trusted advisor to the client and support their investment decision process through providing subject matter experts across a wide range of specialist areas on an advisory basis.
Kiwa remained on standby to participate in multiple clarification sessions with the supply chain and technology developers, providing a targeted panel of technical and commercial experts. This facilitated a robust assessment of the proposed technologies in a short timescale due to the experience of the team. Relatively novel and innovative in concept, the projects were first assessed from a first principles perspective, providing a level of confidence and comfort to the client that the individual building blocks of the projects had theoretical merit to be developed further into a hybridised solution.